Italy's finance minister urges ECB to ease policy, combat strong euro

Reuters Staff

2 Min Read

Italy's Economy Minister Fabrizio Saccomanni speaks to reporters at the close of the G7 Finance Ministers and central bank governors summit at Hartwell House in Aylesbury, southern England May 11, 2013.Yui Mok/POOL

LONDON (Reuters) - Italy's finance minister urged the European Central Bank to ease monetary policy, questioning the effectiveness of the bank's strategy of verbal intervention to cap the strong euro, the Financial Times reported on Tuesday.

"The euro is now the strongest currency in the world vis-a-vis the dollar, the renminbi, the pound, the Swiss franc," Fabrizio Saccomanni was quoted as saying.

"That must reflect the perception of the monetary stance in Europe vis-a-vis what other countries are doing now and in the foreseeable future. If I understand markets they want to see some concrete (policy) action at some point and maybe before the end of the year."

The euro has risen more than 5 percent against the U.S. dollar in the last 4 months, increasing worries that it could crimp the nascent recovery in the common currency bloc.

Saccomanni, a former director general at the Bank of Italy, said the ECB's assurances that interest rates would stay low until the economy picked up "does not seem to be working as well as one hoped."

ECB president Mario Draghi is expected after the bank's governing council meets on Thursday to signal a readiness to ease policy further, after annual inflation in the euro zone fell to 0.7 percent in October, its lowest level in almost four years and well below the bank's target of just below 2 percent.

But all but one of 23 euro money market traders polled by Reuters on Monday expect the central bank to keep its main refinancing rate unchanged this week.